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About 4,500 construction firms have gone bust over the past two years. In fact, contractors accounted for 25% of all UK insolvencies during 2009. With that in mind, it鈥檚 probably fair to say this isn鈥檛 the best time to leave a well-established contractor you鈥檝e been with for years and attempt to start a new firm from scratch.

But three months ago Barry Breed, Darren Size and Ian Jones decided it was the perfect time to do just that. The three were directors of Holloway White Allom (HWA), best known as a high-end refurbishment and building contractor; their plan was to become its biggest competitor.

鈥淲e felt quite restricted at HWA鈥�, says Size. 鈥淚t grew out of Laing and so has a tendency to have big contractor solutions to small residential projects.鈥�

The turning point for Breed, however, came with HWA鈥檚 refinancing deal in April 2008. 鈥淥vernight I became a main board director at a company with 拢12m of debt. As a business you become a lot more commercial as belts get tightened.鈥�

The luxury market Sizebreed is seeking to gatecrash is not as free spending as it was a few years ago. The Russian oligarchs, City magnates and Saudi oil billionaires who are the principal clients for this sector are just as vulnerable to the global recession as the rest of the industry鈥檚 clients.

Last year, HWA posted a pre-tax profit of 拢4m; this was down 20% despite a 24% jump in turnover. 鈥淐lients are more demanding about value for money,鈥� says Breed, hinting that the USP of Sizebreed will be its ability to undercut its rivals thanks to its low cost base. He continues: 鈥淵ou can get a good 5% out of the cost as a business of our size, which is about 拢50,000 on a 拢1m project.鈥�

"You can get 5% out of the cost at our size, which is about 拢50,000 on a 拢1m project"

Barry Breed

Breed admits to some misgivings about setting up a business during a recession, but two factors made the transition smoother. First, Ian Jones had cashed in his 10% stake in HWA just before the credit crunch bit and was able to provide 拢200,000 for start up capital. He is the only financial backer and owns 10% of the equity 鈥� the remaining 90% of his investment is in the form of loan notes, which are due to be repaid within five years, although there is no fixed deadline. There is more money available from Jones should they need it and one of their wealthy clients has also talked about investing in them at the bottom of the market.

Going down the bank debt route would have meant putting their houses up as security. So would they have done it if necessary? Breed pauses before saying: 鈥淲e would have remortgaged to raise the cash if necessary, yes.鈥�

Not that it鈥檚 an easy market to break into. 鈥淭he luxury market is a small pond,鈥� says Breed, 鈥測ou have to know the right consultants, project managers and architects.鈥�

Which brings us to the second factor that eased the transition 鈥� they were able to take a couple of clients with them.

And how easy do they find it to deal with those super-rich clients? Breed says: 鈥淭hey want the same level of service from their building contractor that they get when they buy a yacht or luxury car. For example we had a client who could only have meetings on Saturdays.鈥�

Size and Breed are also hoping for a further boost from the widely anticipated bumper City bonuses which, government permitting, are set to be paid out this year.

Breed refuses to discuss who their clients are likely to be but will clearly be looking to gain contracts from those they worked for at HWA, including Roman Abramovich, the owner of Chelsea football club, Lakshmi Mittal, the Indian steel magnate and Wafic Sa茂d, the Syrian-Saudi billionaire. Size adds: 鈥淲e鈥檙e debt free and have funding in place so we鈥檙e looking at quality over quantity in terms of workload.鈥�

Breed believes that a business with a 拢15-20m turnover is the right size to deal with the type of projects he was in charge of at HWA when he ran the group鈥檚 拢50m a year-turnover London operation. 鈥淚t gives us a bit of scale while being small enough to ensure we can give clients the personal care and attention they want at this level,鈥� he says.